1. Loss due to non-qualified stock options:
I am not an accountant but my impression from what I heard is that the difference between the option grant price and the current market price can be used as a tax loss carry-forward for computing income taxes due. Thus, as an example, an option granted five years ago at $5.00 and exercised today with the stock at 54-1/2 would create a loss subtracing $5.00 from 54-1/2. Accordingly, the higher the stock goes, the more potential paper losses are created for Agouron in computing tax liabilities. There is no hard dollars loss to the company, just a benefit in computing income tax liability.
2. The BID dosage is taking the drug 2X a day instead of 3X. Peter seemed to feel this was of critical importance in that it would substantially crease the probability that patients on drug will remain compliant. Small study data to be released in Hamburg, very exciting, with much larger study data to be presented in Chicago in February. This is a very big event if all continues to go well, as my sense is it will.
3. The fact that the overwhelming majority of new patients coming on to Viracept are now patient naive is a major plus because the experience has been that when you start on the drug and take it correctly, it is a very, very successful therapy. This also validates the fact that informed clinicians are using Viracept as the drug of choice.
Today, at 3 p.m., Agouron management is in New York to speak at the UBS Conference. There will probably be no new news as all current information was discussed on conference call. Also, I failed to mention on my post that Agouron management stated there is no need for additional equity financing through fiscal 1998.
On another matter, I cannot wait to see the short interest figures when they come out on the 25th of the month. It will be very interesting to see if they used the Montgomery downgrade which I still cannot in any way understand since his conclusions were contradicted by all the clinical experts in this area. It would also be very interesting to know who his sources were for his conclusions. In any event, as I stated before, the bottom line is performance, and if you do some simple arithmetic and begin with 60,000 patients on drug at the end of September, let's be conservative and say instead of the average of 10,000 patients per month they have put on drug since its introduction, this is cut in half and they only put 5,000 per month over the next nine months of fiscal 1998, that still gives us 105,000 patients on the drug on June 30 of 1998. Multiply 4,850 by 105,000 patients and you come up with $510,000,000 in revenues on an annualized basis going into the next fiscal year, and this does not include revenues from overseas and other parts of the world. Folks we have a big winner here. Don't worry about day to day fluctuations even though they can be very rewarding at times (my "semi-annual giveaway"); the real money is made by long-term investors.
Cheers. |
